from stockwatch 2024-10-21 14:08 ET - Market Summary
by Will Purcell
The diamond and specialty minerals stocks box score for Monday was a positive 85-72-153 as the TSX Venture Exchange rose one point to 623. Dermot Desmond and Mark Wall's Mountain Province Diamonds Inc. (MPVD) lost one cent to 14.5 cents on 145,000 shares today. The company rolled out the third quarter production and sales data for its 49-per-cent-owned Gahcho Kue mine in the Northwest Territories, and the numbers put a bit more room between Mountain's share price and its all-time low of 10.5 cents, set in midsummer.
The good news is that the mining and surface crews are doing well enough to keep Gahcho Kue's quarterly carat count above the one-million mark, mitigating the effect of a steadily weakening average grade. The mine yielded nearly 924,000 tonnes and the processing plant handled just over 961,000 tonnes -- hauling a bit of ore from a hefty stockpile to do so. The kimberlite yielded nearly 1.19 million carats, good for a production grade of just 1.27 carats per tonne.
Through the first three quarters of 2024, Gahcho Kue has recovered 3.77 million carats from 2.73 million tonnes of kimberlite, about 1.38 carats per tonne. A year earlier, the mine managed 3.98 million carats from 2.94 million tonnes of kimberlite, an average of 1.66 carats per tonne. (Gahcho Kue had its best quarter of 2023 in the final three months, when it gleaned 1.57 million carats from 855,000 tonnes, about 1.84 carats per tonne.)
Gone, it appears, are the days when the mine regularly surprised investors, delivering grades handily topping two carats per tonne from the upper reaches of the two key pipes, 5034 and Hearne. Lately, the miners have been wrapping up those open pits, with mining at the Hearne pit expected to be complete before the end of the year. The 5034 pit is more complicated: While mining is nearly done there as well, the crews must also strip waste to access the adjoining NEX body.
Either way, the deeper mining within those two pits has been disappointing of late. In July, Mr. Wall, president and chief executive officer, acknowledged that the company and its senior co-venturer, De Beers Canada, had been seeing "a lower-than-expected grade at the deep portions of the pits," a situation first noted in early in the year, and which continued through the second quarter and into the third. "The team has been working on identifying and isolating the small area of grade underperformance," Mr. Wall cheered, concluding that "this will improve as we move through the year."
Mr. Wall did not mention the underperforming grades deep in the pits in his third quarter summary, and yet the quarterly grade fell again, to 1.24 carats per tonne, down from 1.37 carats per tonne in the second quarter and 1.57 carats per tonne in the first quarter. The drop was nevertheless good news, according to Mr. Wall, who cheers that the production grade was "slightly better than plan."
The plan, you see, had Gahcho Kue processing a higher proportion of Tuzo kimberlite in the quarter and the upper part of that body suffers from significant dilution, limiting the grade. This was always expected, Mr. Wall says, with the company's 2024 guidance based on markedly lower grades in the third quarter -- and the fourth quarter, for those looking ahead.
And so, De Beers and Mountain Province are sticking with the 2024 guidance. The long-range forecasts had long assumed 2024 would be gloomy, but as the gloom drew closer the partners tweaked their plan to mitigate the expected weak production. In the formal guidance for 2024, the mine was expected to recover between 4.2 million and 4.7 million carats from 3.4 million to 3.6 million tonnes of kimberlite, about 1.27 carats per tonne.
Now, Mr. Wall says that he and his crew expect the tonnes treated to be in the upper range of the forecast, with the carats produced likely to fall "in the mid- to upper portion of the guidance range." If so, one had best be prepared for the weakest quarterly production since the dark days of COVID, as that predicted range is just 900,000 carats away. (A crude estimation from the guidance and Mr. Wall's course update suggests the fourth quarter grade will be the weakest ever, near one carat per tonne.)